To The Moon

Public Holidays

There are no public holidays for Singapore, Hong Kong, the USA and China in the coming week.

Economic Calendar (29 Jan 2024)

Notable Highlights

• Fed interest rate decision. This is the most-watched announcement in the coming week. The market is looking forward to rate cuts but the Fed has to weigh between

• PMI. S&P Global US Manufacturing PMI, ISM Manufacturing PMI, and Chicago PMI help shed light on the demand for goods and services (from the manufacturer’s point of view). China’s PMI data can be seen as a reference for global demand and production.

• Jobs. JOLTs job openings reveal the number of jobs available in the market. ADP nonfarm employment and Non-farm payrolls change sheds light on non-farm employment.

• CB Consumer Confidence. This will reveal consumer sentiments. A higher-than-forecast data is bullish for the market.

• Initial Jobless Claims - This reflects the impact of unemployment, a data point for the Fed’s interest rate decision. The unemployment rate will also reveal the job and jobless situation in the USA.

• Crude Oil Inventories can be seen as forward indicators of market demand and consumption. If the trend of excess inventories continues, this is demand erosion that can lead to reduced production & weakening consumer spending.

Earnings Calendar (29 Jan 2024)

In the coming week, some of the Magnificent will release their earnings with the likes of Microsoft, Alphabet, Apple, Amazon and Meta. There are also other notable earnings in the coming week with Sofi, GM, UPS, Starbucks, Merck, ExxonMobil, Chevron and Mastercard.

Let us look at Amazon.

Amazon has grown 55.63% from a year ago and has a P/E ratio of 81.32.

Observations from recent performances:

• Revenue growth: $74B (2013) to $513B (2022)

• Gross profit growth: $5B (2013) to $67B (2022)

• Operating profit growth: $0.745B (2013) to $12.2B (2022)

• EPS. It grew from $0.03 (2013) to $3.24 (2021) but has declined to -$0.27 (2022).

• There are some concerns about falling profits.

For the coming earnings, the forecast for the EPS and Revenue are 0.7951 and 165.95B respectively. Will Amazon be able to beat the forecast?

Market Outlook - 29 Jan 2024

Technical observations of the S&P500 1D chart:

• The Stochastic indicator is about to complete a top crossover. The current uptrend should reverse soon.

• The MACD indicator is showing an uptrend.

• Moving Averages (MA). Both the MA50 line and the MA200 line are on an uptrend. The last candle is above both the MA 50 line and the MA 200 line. Thus, it could be read as bullish for the long-term and mid-term.

• Exponential Moving Averages (EMA). The 3 EMA lines are moving in a fanned-out pattern, thus implying an uptrend. Once, all 3 lines converged, a new downtrend would be confirmed.

From the 1D technical indicators above, there are a total of 20 (Buy), 0 (Sell) and 0 (Neutral). Investing recommends the “STRONG BUY” recommendation based on the technical indicators above (1D chart for S&P500).

From the data above, the market should have an uptrend in the coming days. Note that there are a few “overbought” indicators for the S&P 500. A reversal to a downtrend could be on the cards.

News and my thoughts from the last week (29 Jan 2024) - CRE, PCE & Debt

• The number of big-box warehouse lease signings fell to 43 in 2023 from a record 63 in 2022, as economic uncertainty and changing inventory management practices weighed on demand for mega-facilities, according to CBRE data. - Freightwaves

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*U.S. DECEMBER CORE PCE PRICE INDEX RISES 2.9% Y/Y; EST. 3.0%; PREV. 3.2% *LOWEST SINCE MARCH 2021 - Investing

• I drive a 2015 car. My insurance used to be $59.59 a month.

  I was just told they are upping my insurance to $149.35 a month. - Twitter user Decade Investor

• Owning an EV increases the average household’s electricity consumption by approximately 70%, according to energy supplier Ovo Energy. If everyone with an EV charged at peak time, the strain on the grid would be enormous especially when power generation is unpredictable. Existing US power lines are often so clogged that they can’t deliver electricity from wind and solar projects to where it is needed most. This congestion costs the country billions of dollars per year and has been getting worse.- NY Times

• Tesla down to $195 post market hours after earnings.

  Market seems to have taken badly to the earnings while it is not all bad news.

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• Willingness is a good start. For business opportunities to be qualified, the consumers need to be both willing and able.

• US household debts were $17T in Q3. Out of this, there is a credit card debt of $1T with over 21% interest rate p.a. US corporate debts were $10T as per Jan 2024. US Federal debt is $34T. There's nothing to be concerned with right?

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• IMF - "An estimated $1.2 trillion of commercial real estate debt in the US is maturing in the next two years. Around 25% of that is loans to the office & retail segments, most of which is held by banks & commercial mortgage-backed securities..."

My investing muse

Layoff news continued last week:

• The latest round of layoffs comes as Google has been cutting jobs consistently over the past year, with reports suggesting that the total number of employees affected this time stands at 15,000, following last year's 12,000 job cuts. - India Today

• eBay is laying off 1,000 employees, about 9% of its staff - CNN

• Macy's is planning to lay off about 13% of its corporate staff and close five stores to trim costs and redirect spending to improve the customer experience - USA TODAY

• Microsoft lays off 1,900 workers, nearly 9% of gaming division, after Activision Blizzard acquisition - CNBC

• Salesforce is laying off about 700 employees across the company in the latest round of sackings to hit the tech industry. - Business Today

• Levi Strauss will lay off 10% to 15% of its global corporate workforce. - CNBC

• With reports of layoffs affecting 20% or more of the LA Times newsroom. - Yahoo News

• Shares of German software company SAP jumped Wednesday after it released its quarterly and full-year results and announced plans to restructure 8,000 jobs in its push toward artificial intelligence. - CNBC

• As tech firms prioritize investments into artificial intelligence and go on a hiring spree, other segments are likely to see layoffs continue into 2024.

  More than 20,000 tech employees have already lost jobs so far in 2024. - CNBC

Layoffs continued into 2024. Is this the end or is this the start? Is this the trimming of excess, an anticipation of falling demand or both?

Leading Economic Indicator (LEI)

One of the important data that I look to for macro is LEI from The Conference Board.

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(Updated on 22 Jan 2024) The Conference Board Leading Economic Index® (LEI) for the U.S. fell by 0.1 percent in December 2023 to 103.1 (2016=100), following a 0.5 percent decline in November. Can we achieve a soft landing?

As per the chart above, there is a signal for possible recession.

The components of the LEI are categorized into both Financial and Non-Financial Components. These 10 components give a good reflection of the economy. There are signs of a potential recovery. Will we get a soft landing that many have hoped for?

Conclusion

I have mentioned that technicals indicated potential all-time highs (ATH) for some indices and stocks. Inflation is not running rampant but remained stubborn, still away from the 2% target set by the Fed.

A chart showing the 2023 gain of the Magnificent Seven stocks.

The Magnificent 7 were the driving forces behind the S&P500 gain in 2023. Likewise, their (non-) performance can also pull down the index.

This will be a big week for the Magnificent 7 and the Index. Thus, let us monitor and consider some hedging.

@TigerStars

$Amazon.com(AMZN)$

$S&P 500(.SPX)$

$Apple(AAPL)$